Binyamin Netanyahu and Mahmood Abbas en route to Washington for dinner with US president

How it was 10 years ago: from left, Israeli prime minister Ehud Barak, US president Bill Clinton and Palestinian leader Yasser Arafat pose during the Middle East peace summit on 11 July 2000 at Camp David, Maryland. Photograph: Stephen Jaffe/AFP/Getty Images

The contentious issue of West Bank settlement construction is threatening to dominate the first face-to-face talks for 20 months between Israel and the Palestinians, due to begin with a White House dinner hosted by President Barack Obama tomorrow night.

The Israeli prime minister, Binyamin Netanyahu, and Palestinian president, Mahmoud Abbas, were en route to Washington today amid opposition, cynicism and indifference among their respective populations, despite Obama's insistence that a comprehensive peace deal can be reached within 12 months.

The White House has staked considerable political capital on the negotiations, which are the result of intense pressure exerted on both sides.

The dinner, scheduled for the relatively late time of 8pm to accommodate guests fasting during daylight for the Muslim holy month of Ramadan, will also be attended by King Abdullah of Jordan, Egyptian president Hosni Mubarak and Middle East envoy Tony Blair.

Formal discussions, chaired by the US secretary of state, Hillary Clinton, will begin on Thursday before moving to the Middle East later in September.

Despite the fact that the talks were intended to begin without preconditions, both sides have set out early demands that have the potential to derail the process.

The most immediate concerns the looming end on 26 September of a partial moratorium on settlement construction, reluctantly agreed by Netanyahu last November. The Palestinians have threatened to walk out of the talks unless the Israelis agree to extend the freeze, saying settlement building is fatally undermining the prospects of a viable state.

Netanyahu has said repeatedly – most recently at Sunday's cabinet meeting – that there is "no change" in the Israeli position, indicating that the freeze will end on schedule. He is under pressure from the right wing of his coalition to allow construction to resume.

Palestinian negotiator Saeb Erekat told reporters in Ramallah last week that Israel "faces a choice between settlement activity and the path of peace". He added: "If [Netanyahu] decides to restart construction, he will have chosen to end the negotiations."

The Israeli prime minister cancelled a session of his inner cabinet which was expected to discuss the future of the settlement freeze just before flying to Washington, suggesting he was unwilling to be pressed into a commitment.

However, Netanyahu told members of his Likud party on Monday that he believed a peace deal was possible. "I am not naive. I see all the difficulties and hurdles and despite this, I believe that a final peace agreement is a reachable objective."

He added: "Of course, this does not depend just on us," saying he hoped Abbas would be a "brave partner".

Abbas is facing considerable opposition to the talks among Palestinians. A protest rally in Ramallah last week ended in disarray, when plain-clothes security officials sparked a fracas. The Palestinian prime minister, Salam Fayyad, yesterday apologised for the incident. A further rally is planned for tomorrow.

The US administration insisted yesterday that an agreement was possible "within a one-year time frame".

State department spokesman PJ Crowley told reporters: "While the parameters of an ultimate, comprehensive peace agreement are well known, we do not expect to achieve peace in one meeting." The US wanted to see "the launch of a vigorous process that will involve significant involvement by the leaders themselves ... including the full participation of the United States, supported by other countries in the region and around the world".

Despite insisting that Abbas come to the negotiating table without preconditions, Netanyahu has said the basis of the talks must be recognition of the Jewish nature of the Israeli state and an agreement for Israeli forces to be stationed in the Jordan valley, on the eastern border of a future Palestinian state.